By Svea Herbst-Bayliss
NEW YORK (Reuters) – Cannae Holdings plans to hold talks about participating in a deal to acquire Rapid7 and will stop working with the activist investor that has been urging the cybersecurity company to put itself up for sale, according to a regulatory filing.
Hedge fund Jana Partners and publicly traded holding company Cannae have “de-grouped” and will no longer be coordinating actions with respect to Rapid7, the firm said in the filing made on Wednesday.
This step will allow Cannae to engage in confidential discussions with Rapid7 and other potential buyers without involving Jana.
Jana has an economic interest of more than 12% and owns 5.8% of voting shares of Rapid7. Since June, when the activist first unveiled its investment, Jana has been urging the Boston-headquartered company to improve its operations and forecasting and to consider selling itself.
Cannae, which is led by billionaire Bill Foley, currently has operating interests in Dun & Bradstreet Holdings and Alight. Jana said in a filing in June that it was working with Cannae and that the plan was for Cannae to potentially participate in an acquisition of the company.
Six weeks ago, Reuters reported that Rapid7 was exploring options with its investment bankers after attracting acquisition interest from buyout firms, according to people familiar with the matter. Goldman Sachs and JPMorgan are advising Rapid7.
Rapid7 specializes in so-called vulnerability management, providing software tools and services that help businesses assess and monitor security risks. The company has been forced to compete harder for business as corporate clients cut back on security spending due to broader macroeconomic uncertainty.
Its share price has fallen 29% since January.
Jana has previously pushed for the sale of New Relic, which was taken private by TPG and Francisco Partners last year. It also pushed for the sale of Zendesk, which was taken private in 2022 by investment firms led by Hellman & Friedman and Permira.
(Reporting by Svea Herbst-Bayliss in New York; Editing by Matthew Lewis)
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